Measures

Cannabis Business License Tax - Measure S

Ballot Question

"To protect essential municipal services, including repairing public facilities, reducing traffic congestion, and improving pedestrian and bicycle safety; and to support regulation of the cannabis industry, and preserve the City of Emeryville’s long-term financial stability, shall the ordinance to impose a business tax of up to 6% of gross receipts on all cannabis businesses within Emeryville, thereby generating an estimated $2,000,000 annually for unrestricted general revenue purposes, and which continues until repealed by the voters, be adopted?"

City Attorney Impartial Analysis

The Emeryville City Council unanimously adopted Resolution 18-113 placing Measure S on the ballot. If adopted by a majority of the voters, Measure S would add Section 3-1.1.29, “Cannabis Businesses,” to Chapter 1 of Title 3 of the Emeryville Municipal Code establishing a new cannabis business license tax for cannabis businesses. “Cannabis Business” is defined in Chapter 25 of Title 5 of the Emeryville Municipal Code.

Cannabis businesses currently pay 0.10% of annual gross receipts, or $25, whichever is greater. If approved, the proposed measure would impose a tax on the privilege of conducting a cannabis business within the City of Emeryville of up to 6% of annual gross receipts on all cannabis businesses. The City Council would adopt the effective tax rate by separate resolution. The City Council may raise or lower the tax rate from time to time by resolution; however the tax rate may not exceed 6% unless authorized by another vote of the electorate. The measure also authorizes the City Council to set different tax rates for different types of cannabis businesses, subject to the 6% cap.

The tax would apply to all for-profit and non-profit businesses involved in commercial cannabis activities within the City, including delivering, dispensing, distributing, processing, manufacturing, selling, or testing adult-use or medicinal cannabis, as well as adult-use or medicinal cannabis-derived products. The tax is only on commercial cannabis businesses, and is not a sales tax imposed on individuals purchasing adult-use or medical cannabis. The tax would not be imposed on persons engaged only in personal cultivation for personal consumption in accordance with current State law.

The proposed measure is a general tax, and therefore the revenues generated would be placed in the City’s general fund and may be used for unrestricted governmental purposes. The measure is estimated to generate approximately $2,000,000 annually. The tax would remain in effect until repealed by the voters.

As a general tax, the California Constitution requires the proposed measure to be adopted by a majority vote (greater than 50%) of the electorate. A “Yes” vote would approve the cannabis business license tax on cannabis businesses. A “No” vote would reject the cannabis business license tax.

Michael A. Guina
City Attorney

Ballot Argument in Favor of Measure S

Voting YES on Measure S will allow Emeryville to impose a tax on commercial cannabis businesses to ensure that the city has adequate resources to properly support and regulate the cannabis industry without harming our investment in core city services, such as local infrastructure, public safety, and community services.

The City of Emeryville recently began issuing permits to cannabis businesses after voters approved Proposition 64, the Adult Use of Marijuana Act, which legalized recreational cannabis statewide. Cities like Emeryville need to identify new revenues to help cover the costs of adequately regulating and supporting local cannabis businesses.

Measure S is fiscally responsible, timely and prudent. The City of Emeryville has a limited pool of resources available to help address many of the key service and infrastructure needs facing our community today. By establishing a local tax on cannabis business that is capped at a reasonable rate of 6%, Emeryville can cover the costs of supporting this new industry without compromising the quality or level of services residents enjoy in our community.

Measure S has been carefully crafted to ensure that the city balances opportunities for new revenue against the sustainability and success of the emerging cannabis industry. Reasonable regulations paired with a fair tax structure will discourage illegal sales, help us attract new local businesses, protect Emeryville consumers, and diversify our local economy.

The Emeryville City Council unanimously supports Measure S. Please join us by voting YES on Measure S on November 6th.